Bank interest rate increased to 0.5%

06 November 2017

For the first time in over a decade the Bank of England has increased the interest rate from 0.25% to 0.5%.

The Bank of England’s Monetary Policy Committee (MPC) sets monetary policy to meet the 2% inflation target, and in a way that helps to sustain growth and employment. At its meeting ending on 1 November 2017, the MPC voted by a majority of 7-2 to increase bank rate by 0.25 percentage points, to 0.5%.

The last time we saw a rise in the interest rate was 5 July 2007. To put that into context, Tony Blair had recently resigned as Prime Minister and the first iPhone had just been released.

On that day, the bank voted for a higher interest rate against a backdrop of a “strong global economy”. The rate had risen twice that year already and there was little sign of the impending financial crisis.

But between the last interest rate rise and this one, the MPC had met 118 times and decided against raising interest rates on every occasion.

When setting interest rates, the MPC considers many factors including debt, savings, inflation, economic growth, employment and wages. They’ll also look at conditions in economies and financial markets worldwide.